Housing Starts And Building Permits Both Rise In February - March 19, 2013

The housing market continues to recover, coming back from the depression-like conditions in place for much of the past half decade. To be sure, this critical economic sector is not all the way back. Indeed, from the irrationally exuberant levels of 2005 and 2006, it is not even half the way back.

Nevertheless, the gains are becoming more appreciable, with last month's results on the homebuilding front being illustrative of this much better trend. That is because housing starts gained slightly during the latest month, coming in at an annualized rate of 917,000 homes. However, this figure was against the prior month's revised building level of 910,000 homes. Earlier, January's level of starts had been estimated at 890,000. So, the 917,000 number was really 3.0% better than the initially estimated starts number for the first month of this year. Moreover, starts were up by a formidable 27.7% from the February, 2012 level of 718,000 homes.

At the same time, building permits, a more forward-looking metric than housing starts, increased by 4.6% in February, to an annual rate of 946,000 homes. That compared with the January rate of 904,000 permits. The latest figure was an even more impressive 33.8% above the February, 2012 permit rate of 707,000 homes.

Meanwhile, the latest permit number far exceeded results for any month in 2012, with the best month last year having a permit rate of 909,000. That was in December. The lowest monthly total last year was the aforementioned 707,000 homes receiving permits last February. It should be noted that the first five months last year saw permit levels in the 700,000 range on an annualized basis.

A similar situation prevailed in the housing starts category, where building levels remained in the 700,000-800,000 range between January and August. The best month for starts in 2012 was in December, when the annualized starts rate had soared to 982,000. That was the only month in 2012 in which starts had climbed above 889,000 on an annual basis.

As to regions of the country, building was up very strongly last month in the Northeast and the Midwest, the two smallest regions of the country, but were off modestly in the South and the West. Improving weather in February versus January was likely a factor, and that factor would be mainly appropriate in the weather-affected Northeast and the Midwest.

Taken as a whole, this was a decent report, and suggests that this sector is likely to continue advancing in the months to come, as pent-up demand, low mortgage rates, and increasing affordability all contribute to what is shaping up as a durable recovery from depression-like conditions in place in this economic arena between 2008 and 2011.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.